For a startup facing a declining valuation, there are a few options. The leadership can raise a "down round" at a lower valuation; accept "dirty" terms on their next round, which extract concessions that can lead to trouble down the line; or seriously consider acquisition. They could also try to claw their way toward profitability.

"There's been a little denial, just like at the start of drug-addiction treatment programs," Deeter said. "Now we're rolling into the coping-and-reaction phase. For some, the best option may be entering into [mergers and acquisitions] discussions."

Microsoft kicked off 2016's M&A by buying LinkedIn for $26.2 billion ($196 per share). But expect to see late-stage startups getting in on the action. Bloomberg spoke to an M&A exec at a big US tech company who recently has had "at least four" meetings with late-stage founders about an acquisition. Last year, the founders were asking prices that were too high to even warrant a meeting, the exec said.